Not only does it make people stupid
, but it makes people do stupid things to work around the problem of not having inline replies. Namely, if people want to reply to an email point-by-point, they end up doing silly things like changing the color of their text in the reply. If those point-by-point replies further require point-by-point responses, then you end up with a cavalcade of rainbow colors or font changes or the like which quickly becomes difficult to keep track of and becomes completely incomprehensible if someone does the unthinkable and changes the message formatting to plain text (or tries reading it on a text-only client, for that matter).
Reply markers exist for a reason, Microsoft.
(And yes I realize it's possible to turn them on in Outlook but it's not the default, and in particular our project manager doesn't set it up. Anyway, top-posted replies with per-line reply markers are doubly-stupid since now you've got a workaround for a workaround for something which was never a problem to begin with.)